EXECUTION COPY
NOTE PURCHASE AGREEMENT
AMONG
CVG INVESTMENT LLC,
GV INVESTMENT LLC,
EXPEDIA, INC.
AND
CLASSIC VACATION GROUP, INC.
DATED AS OF JANUARY 22, 2002
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms ........................................ 2
ARTICLE II
PURCHASE AND SALE
SECTION 2.01 Purchase and Sale of the Notes ............................... 5
SECTION 2.02 Purchase Price ............................................... 5
SECTION 2.03 Closing ...................................................... 6
SECTION 2.04 Closing Deliveries by CVGI ................................... 6
SECTION 2.05 Closing Deliveries by GVI .................................... 6
SECTION 2.06 Closing Deliveries by Classic ................................ 6
SECTION 2.07 Closing Deliveries by the Purchaser to CVGI .................. 6
SECTION 2.08 Closing Deliveries by the Purchaser to GVI ................... 6
SECTION 2.09 Resales of Initial CVGI Shares ............................... 7
SECTION 2.10 Resales of Initial GVI Shares ................................ 7
SECTION 2.11 No Election in USA Transaction ............................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
SECTION 3.01 Organization, Authority and Qualification of the Seller ...... 9
SECTION 3.02 No Conflict .................................................. 9
SECTION 3.03 Governmental Consents and Approvals .......................... 9
SECTION 3.04 Good and Marketable Title .................................... 9
SECTION 3.05 Representations and Warranties contained in the NPAs ......... 10
SECTION 3.06 Full Disclosure .............................................. 10
SECTION 3.07 Valid Exemption .............................................. 10
SECTION 3.08 Purchase Entirely for Own Account ............................ 10
SECTION 3.09 Investment Experience ........................................ 10
SECTION 3.10 Receipt of Information ....................................... 10
SECTION 3.11 Allied Capital Note .......................................... 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CLASSIC
SECTION 4.01 Asset Purchase Agreement ..................................... 11
SECTION 4.02 Replacement Notes ............................................ 11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 5.01 Organization and Authority of the Purchaser .................. 11
SECTION 5.02 Capitalization ............................................... 12
SECTION 5.03 No Conflict .................................................. 12
SECTION 5.04 Governmental Consents and Approvals .......................... 13
SECTION 5.05 SEC Filings; Financial Statements ............................ 13
SECTION 5.06 Purchase Entirely for Own Account ............................ 13
SECTION 5.07 Investment Experience ........................................ 13
SECTION 5.08 Receipt of Information ....................................... 14
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Regulatory and Other Authorizations; Notices and Consents .... 14
SECTION 6.02 Notice of Developments ....................................... 14
SECTION 6.03 Further Action ............................................... 14
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SECTION 6.04 Extension of Tender Offer; Termination of NPAs; Deemed
Amendment to Notes .................................................. 14
SECTION 6.05 Cancellation of Notes; Issuance of Replacement Notes ......... 15
SECTION 6.06 Withdrawal of Tender Offer and Payment to Classic
Stockholders ........................................................ 15
SECTION 6.07 Registered Shares ............................................ 15
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01 Condition to Obligations of the Sellers and the Purchaser .... 19
SECTION 7.02 Conditions to Obligations of the Sellers ..................... 19
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.01 Termination .................................................. 19
SECTION 8.02 Effect of Termination ........................................ 19
SECTION 8.03 Waiver ....................................................... 20
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Expenses ..................................................... 20
SECTION 9.02 Notices ...................................................... 20
SECTION 9.03 Public Announcements ......................................... 22
SECTION 9.04 Headings ..................................................... 22
SECTION 9.05 Severability ................................................. 22
SECTION 9.06 Entire Agreement ............................................. 23
SECTION 9.07 Assignment ................................................... 23
SECTION 9.08 No Third Party Beneficiaries ................................. 23
SECTION 9.09 Amendment .................................................... 23
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SECTION 9.10 Governing Law ................................................ 23
SECTION 9.11 Counterparts ................................................. 24
SECTION 9.12 Specific Performance ......................................... 24
Exhibit A Form of 7.5% Replacement Note
Exhibit B Form of 9% Replacement Note
Exhibit 6.04(c)(i) 7.5% Notes Amendment and Waiver Agreement
Exhibit 6.04(c)(ii) 9% Notes Amendment and Waiver Agreement
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NOTE PURCHASE AGREEMENT, dated as of January 22, 2002, by and among GV
INVESTMENT LLC, a Delaware limited liability company ("GVI"), CVG INVESTMENT
LLC, a Delaware limited liability company ("CVGI"; and, together with GVI, the
"Sellers"; and each a "Seller"), EXPEDIA, INC., a Washington corporation (the
"Purchaser"), CLASSIC VACATION GROUP, INC., a New York corporation ("Classic")
and, solely for the purposes of Section 6.06(b) herein, XXXXXX EQUITY INVESTORS
III, L.P., a Delaware limited partnership ("Xxxxxx").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Note Purchase Agreement (the "7.5%
NPA"), dated as of November 2, 2001, between CVGI and Classic, CVGI purchased
all of the 7.5% Convertible Senior Subordinated Notes due December 31, 2006
issued by Classic and all of the 7.5% Exchangeable Senior Subordinated Notes due
December 31, 2006 issued by Classic (collectively, the "7.5% Notes");
WHEREAS, as contemplated by the 7.5% NPA, CVG Acquisition Corporation, a
Delaware corporation ("CVGAC") and a wholly owned subsidiary of CVGI, commenced
a tender offer for the shares of Classic held by unaffiliated public
stockholders of Classic (the "Tender Offer"); and such Tender Offer is pending
as of the date of this Agreement;
WHEREAS, pursuant to that certain Note Purchase Agreement (the "9% NPA";
and, where appropriate, together with the 7.5% NPA, the "NPAs"), dated as of
June 20, 2000, between GVI and Classic (the name of which was then "Global
Vacation Group, Inc."), GVI purchased all of the 9% Convertible Subordinated
Notes due July 1, 2007 issued by Classic (the "9% Notes"; and, where
appropriate, together with the 7.5% Notes, the "Notes");
WHEREAS, contemporaneously with this Note Purchase Agreement, the
Purchaser, Classic Custom Vacations, a California corporation ("CCV") and a
wholly owned subsidiary of Classic, and Classic are entering into an Asset
Purchase Agreement (the "Asset Purchase Agreement"), dated as of the date
hereof, pursuant to which the Purchaser has agreed to acquire certain of the
assets, and assume certain of the liabilities, of CCV, all on the terms and
subject to the conditions more particularly set forth therein;
WHEREAS, the Purchaser desires to purchase, and CVGI and GVI desire to
sell, all of the outstanding Notes, all on the terms and subject to the
conditions more particularly set forth herein;
WHEREAS, upon execution of this Agreement, (a) the Sellers shall cause
CVGAC to extend the Tender Offer until the Closing, (b) the NPAs shall
terminate, and (c) the Notes shall be amended so as to allow for the
consummation of the transactions contemplated by this Agreement and the Asset
Purchase Agreement; and
WHEREAS, as soon as practicable following the consummation of the
transactions at the Closing contemplated by this Agreement, (a) the Tender Offer
shall be withdrawn by CVGAC, and (b) the Notes shall be cancelled and in
consideration therefor Classic shall issue to the Purchaser the Replacement
Notes, substantially in the form as Exhibits A and B attached hereto (the
"Replacement Notes").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the Purchaser, CVGI, GVI and Classic hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry, proceeding
or investigation by or before any Governmental Authority.
"Additional CVGI Cash Consideration" has the meaning specified in Section
2.09(b).
"Additional CVGI Net Proceeds" has the meaning specified in Section
2.09(b).
"Additional CVGI Shares" has the meaning specified in Section 2.09(b).
"Additional GVI Cash Consideration" has the meaning specified in Section
2.10(b).
"Additional GVI Net Proceeds" has the meaning specified in Section
2.10(b).
"Additional GVI Shares" has the meaning specified in Section 2.10(b).
"Additional Shares" means the Additional CVGI Shares and the Additional
GVI Shares.
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Agreement" or "this Agreement" means this Note Purchase Agreement, dated
as of January 22, 2002, among the Purchaser, CVGI, GVI and Classic (including
the Exhibits hereto) and all amendments hereto made in accordance with the
provisions of Section 9.09.
"Allied Capital Note" means the 12% Partially Exchangeable Note, dated as
of June 20, 2000, in the principal amount of $5,500,000 made by GVI in favor of
Allied Capital Corporation, a Maryland corporation.
"Asset Purchase Agreement" has the meaning specified in the recitals to
this Agreement.
"Business" means the business of providing customized vacation product and
all other business which immediately prior to the date hereof was being
conducted by Classic.
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"Business Day" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in the City of New
York.
"CCV" has the meaning specified in the recitals to this Agreement.
"Classic" has the meaning specified in the preamble to this Agreement.
"Classic Common Stock" has the meaning specified in Section 3.03.
"Closing" has the meaning specified in Section 2.03.
"Closing Date" has the meaning specified in Section 2.03.
"control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
"CVGAC" has the meaning specified in the recitals to this Agreement.
"CVGI" has the meaning specified in the preamble to this Agreement.
"CVGI Cash Consideration" has the meaning specified in Section 2.07.
"CVGI Purchase Price Bank Account" means the bank account in the United
States to be designated by CVGI in a written notice to the Purchaser at least
two (2) Business Days before the Closing.
"CVGI Shortfall Amount" has the meaning specified in Section 2.09(b).
"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expedia Common Stock" means the common stock, par value $0.01 per share,
of the Purchaser.
"Expedia Preferred Stock" has the meaning specified in Section 5.02.
"Governmental Authority" means any United States federal, state or local
or any foreign government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or arbitral body.
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"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"GVI" has the meaning specified in the preamble to this Agreement.
"GVI Cash Consideration" has the meaning specified in Section 2.08.
"GVI Purchase Price Bank Account" means the bank account in the United
States to be designated by GVI in a written notice to the Purchaser at least two
(2) Business Days before the Closing.
"GVI Shortfall Amount" has the meaning specified in Section 2.10(b).
"Initial CVGI Net Proceeds" has the meaning specified in Section 2.09(a).
"Initial GVI Net Proceeds" has the meaning specified in Section 2.10(a).
"Initial CVGI Shares" has the meaning specified in Section 2.07.
"Initial GVI Shares" has the meaning specified in Section 2.08.
"Initial Shares" means the Initial CVGI Shares and the Initial GVI Shares.
"Law" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order, other requirement or rule of law.
"Nasdaq" means the Nasdaq National Market.
"9% Notes" has the meaning specified in the recitals to this Agreement.
"9% Notes Purchase Price" has the meaning specified in Section 2.02.
"9% NPA" has the meaning specified in the recitals to this Agreement.
"Notes" has the meaning specified in the recitals to this Agreement.
"Notes Purchase Price" has the meaning specified in Section 2.02.
"NPAs" has the meaning specified in the recitals to this Agreement.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Public Stockholders" has the meaning specified in Section 6.06(b).
"Purchaser" has the meaning specified in the preamble to this Agreement.
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"Purchaser SEC Reports" has the meaning specified in Section 5.05(a).
"Registered Shares" has the meaning specified in Section 6.07(a).
"Registration Statement" has the meaning specified in Section 6.07(a).
"Replacement Notes" has the meaning specified in the recitals to this
Agreement.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" or "Sellers" has the meaning specified in the preamble to this
Agreement.
"7.5% Notes" has the meaning specified in the recitals to this Agreement.
"7.5% Notes Purchase Price" has the meaning specified in Section 2.02.
"7.5% NPA" has the meaning specified in the recitals to this Agreement.
"Tender Offer" has the meaning specified in the recitals to this
Agreement.
"Xxxxxx" has the meaning specified in the preamble to this Agreement.
"Transfer Agent" has the meaning specified in Section 6.06(b).
"U.S. GAAP" means United States generally accepted accounting principles
and practices as in effect from time to time and applied consistently throughout
the periods involved.
"Violation" has the meaning specified in Section 6.07(c).
ARTICLE II
PURCHASE AND SALE
SECTION 2.01 Purchase and Sale of the Notes. Upon the terms and subject to
the conditions of this Agreement, at the Closing, (a) CVGI shall sell to the
Purchaser, and the Purchaser shall purchase from CVGI, the 7.5% Notes, and (b)
GVI shall sell to the Purchaser, and the Purchaser shall purchase from GVI, the
9% Notes.
SECTION 2.02 Purchase Price. The aggregate purchase price for the 7.5%
Notes shall be the sum of (a) $15,221,917.81, which amount represents all of the
outstanding principal and accrued interest on the 7.5% Notes as of January 22,
2002 and (b) an amount which equals all of the accrued interest on the 7.5%
Notes accrued from January 23, 2002 up to and including the Closing Date
(collectively, the "7.5% Notes Purchase Price"). The aggregate purchase price
for the 9% Notes shall be the sum of (a) $31,681,625.68, which amount represents
all of the outstanding principal and accrued interest on the 9% Notes as of
January 22, 2002 and (b) an amount which equals all of the accrued interest on
the 9% Notes accrued from January 23, 2002
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up to and including the Closing Date (the "9% Notes Purchase Price"; and,
together with the 7.5% Notes Purchase Price, the "Notes Purchase Price").
SECTION 2.03 Closing. Upon the terms and subject to the conditions of this
Agreement, the sale and purchase of the Notes contemplated by this Agreement
shall take place at a closing (the "Closing") to be held at the offices of
Shearman & Sterling, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, at 10:00
A.M. local time on the third Business Day following the satisfaction or waiver
of all conditions to the obligations of the parties set forth in Article VII, or
at such other place or at such other time or on such other date as the parties
hereto may mutually agree upon in writing (the day on which the Closing takes
place being the "Closing Date").
SECTION 2.04 Closing Deliveries by CVGI. At the Closing, CVGI shall
deliver or cause to be delivered:
(a) to the Purchaser (which in turn shall deliver to Classic for
cancellation) the 7.5% Notes; and
(b) to the Purchaser a receipt for any portion of the 7.5% Notes Purchase
Price paid with CVGI Cash Consideration.
SECTION 2.05 Closing Deliveries by GVI. At the Closing, GVI shall deliver
or cause to be delivered:
(a) to the Purchaser (which in turn shall deliver to Classic for
cancellation) the 9% Notes; and
(b) to the Purchaser a receipt for any portion of the 9% Notes Purchase
Price paid with GVI Cash Consideration.
SECTION 2.06 Closing Deliveries by Classic. At the Closing, Classic shall
deliver or cause to be delivered to the Purchaser the Replacement Notes.
SECTION 2.07 Closing Deliveries by the Purchaser to CVGI. At the Closing,
the Purchaser shall deliver to CVGI the 7.5% Notes Purchase Price, payable, at
the Purchaser's election, in some combination (including all of one form of
consideration or the other) of (i) cash by wire transfer in immediately
available funds (the "CVGI Cash Consideration") to the CVGI Purchase Price Bank
Account, and (ii) a number of shares of Expedia Common Stock (the "Initial CVGI
Shares"), the resales of which will have been registered under the Registration
Statement pursuant to Section 6.07 herein, and in a number reasonably determined
by the Purchaser pursuant to Section 2.09 to be sufficient to yield Initial CVGI
Net Proceeds which, together with the CVGI Cash Consideration the Purchaser
elects to pay CVGI, will be equal to the 7.5% Notes Purchase Price.
SECTION 2.08 Closing Deliveries by the Purchaser to GVI(e) . At the
Closing, the Purchaser shall deliver to GVI the 9% Notes Purchase Price,
payable, at the Purchaser's election, in some combination (including all of one
form of consideration or the other) of (i) cash by wire transfer in immediately
available funds (the "GVI Cash Consideration") to the GVI Purchase
6
Price Bank Account, and (ii) a number of shares of Expedia Common Stock (the
"Initial GVI Shares"), the resales of which will have been registered under the
Registration Statement pursuant to Section 6.07 herein, and in a number
reasonably determined by the Purchaser pursuant to Section 2.10 to be sufficient
to yield Initial GVI Net Proceeds which, together with the GVI Cash
Consideration the Purchaser elects to pay GVI, will be equal to the 9% Notes
Purchase Price.
SECTION 2.09 Resales of Initial CVGI Shares. (a) CVGI will resell the
Initial CVGI Shares only at such time and in such manner (and, as applicable,
using such agent or agents) as shall be approved by the Purchaser in its sole
discretion, provided, however, that CVGI shall be permitted to resell all such
Initial CVGI Shares without such approval beginning thirty (30) trading days
following the Closing Date. The aggregate net proceeds (the "Initial CVGI Net
Proceeds") of the resale or resales of the Initial CVGI Shares shall be equal to
the cash received by CVGI from such resales after deducting any commissions or
other fees or expenses associated with such resales.
(b) To the extent the Initial CVGI Net Proceeds, together with any CVGI
Cash Consideration which the Purchaser elected to pay to CVGI for the purchase
of the 7.5% Notes, is less than the 7.5% Notes Purchase Price (plus interest at
7.5% per annum on any portion of the Initial CVGI Net Proceeds which is not
received by CVGI within fifteen (15) trading days after the Closing Date, such
interest to commence accruing on the day after such fifteen (15) trading day
period) (the "CVGI Shortfall Amount"), within five (5) Business Days following
the consummation of all resales of Initial CVGI Shares, the Purchaser shall pay
to CVGI in cash the CVGI Shortfall Amount; provided, that, at the Purchaser's
election, the Purchaser may elect to issue an additional number of shares of
Expedia Common Stock (the "Additional CVGI Shares") to CVGI reasonably
determined by the Purchaser to be sufficient to yield additional aggregate net
proceeds (the "Additional CVGI Net Proceeds") which, together with any
additional cash (the "Additional CVGI Cash Consideration") that the Purchaser
elects to pay to CVGI to make up a portion of the CVGI Shortfall Amount, will be
equal to the CVGI Shortfall Amount. CVGI's resale of any Additional CVGI Shares
shall also have been registered under the Registration Statement pursuant to
Section 6.07 herein and shall also only be effectuated in accordance with the
procedures outlined in the first sentence of Section 2.09(a) above. Any
shortfall in the Additional CVGI Net Proceeds of the resales of the Additional
CVGI Shares shall be paid in cash by the Purchaser to CVGI within five (5)
Business Days following the consummation of such resales.
(c) To the extent that (i) the sum of the Initial CVGI Net Proceeds and
the CVGI Cash Consideration, if any, is greater than the 7.5% Notes Purchase
Price or (ii) the sum of the Additional CVGI Net Proceeds and the Additional
CVGI Cash Consideration, if any, is greater than the CVGI Shortfall Amount,
within five (5) Business Days following the consummation of such resales, CVGI
shall pay to the Purchaser in cash the amount of such excess.
SECTION 2.10 Resales of Initial GVI Shares. (d) GVI will resell the
Initial GVI Shares only at such time and in such manner (and, as applicable,
using such agent or agents) as shall be approved by the Purchaser in its sole
discretion, provided, however, that GVI shall be permitted to resell all such
Initial GVI Shares without such approval beginning thirty (30) trading
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days following the Closing Date, provided, further, that beginning five (5)
trading days following the Closing Date, GVI shall be permitted to resell such
Initial GVI Shares as shall be sufficient to yield net proceeds from such
resales, after deducting any commissions or other fees or expenses associated
with such resales, to pay all of the outstanding principal and accrued interest
on the Allied Capital Note. The aggregate net proceeds (the "Initial GVI Net
Proceeds") of the resale or resales of the Initial GVI Shares shall be equal to
the cash received by GVI from such resales after deducting any commissions or
other fees or expenses associated with such resales.
(e) To the extent the Initial GVI Net Proceeds, together with any GVI Cash
Consideration which the Purchaser elected to pay to GVI for the purchase of the
9% Notes, is less than the 9% Notes Purchase Price (plus interest at 9% per
annum on any portion of the Initial GVI Net Proceeds which is not received by
GVI within fifteen (15) trading days after the Closing Date, such interest to
commence accruing on the day after such fifteen (15) trading day period) (the
"GVI Shortfall Amount"), within five (5) Business Days following the
consummation of all resales of Initial GVI Shares, the Purchaser shall pay to
GVI in cash the GVI Shortfall Amount; provided, that, at the Purchaser's
election, the Purchaser may elect to issue an additional number of shares of
Expedia Common Stock (the "Additional GVI Shares") to GVI reasonably determined
by the Purchaser to be sufficient to yield additional aggregate net proceeds
(the "Additional GVI Net Proceeds") which, together with any additional cash
(the "Additional GVI Cash Consideration") that the Purchaser elects to pay to
GVI to make up a portion of the GVI Shortfall Amount, will be equal to the GVI
Shortfall Amount. GVI's resale of any Additional GVI Shares shall also have been
registered under the Registration Statement pursuant to Section 6.07 herein and
shall also be effectuated in accordance with the procedures outlined in the
first sentence of Section 2.10(a) above. Any shortfall in the Additional GVI Net
Proceeds of the resales of the Additional GVI Shares shall be paid in cash by
the Purchaser to GVI within five (5) Business Days following the consummation of
such resales.
(f) To the extent that (i) the sum of the Initial GVI Net Proceeds and the
GVI Cash Consideration, if any, is greater than the 9% Notes Purchase Price or
(ii) the sum of the Additional GVI Net Proceeds and the Additional GVI Cash
Consideration, if any, is greater than the GVI Shortfall Amount, within five (5)
Business Days following the consummation of such resales, GVI shall pay to the
Purchaser in cash the amount of such excess.
SECTION 2.11 No Election in USA Transaction. The Sellers understand that
the Purchaser has agreed with Microsoft Corporation in connection with the
Purchaser's pending merger transaction among USA Networks, Inc., Taipei, Inc.,
Microsoft Corporation, Microsoft E-Holdings, Inc. and the Purchaser (the "USA
Transaction") that the Purchaser will not permit any Initial Shares or
Additional Shares issued to the Sellers by the Purchaser under this Agreement to
be eligible to be exchanged for shares of Class B common stock, par value $0.01,
of the Purchaser in connection with the recapitalization of the Purchaser
contemplated by the USA Transaction and the Sellers hereby agree that, with
respect to any Initial Shares or Additional Shares held by them, they will not
elect to exchange such shares for shares of Class B common stock of the
Purchaser in connection with the recapitalization of the Purchaser, provided,
however, that the foregoing shall not in any way affect the Purchaser's
obligations or the Sellers' rights with regard to resales of such Initial Shares
or Additional Shares in accordance with the procedures and time periods set
forth in Sections 2.09 and 2.10 above.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
As an inducement to the Purchaser to enter into this Agreement, each
Seller, hereby represents and warrants, severally as to itself and not jointly,
to the Purchaser as follows:
SECTION 3.01 Organization, Authority and Qualification of the Seller. The
Seller is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all necessary
limited liability company power and authority to enter into this Agreement, to
carry out its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Seller,
the performance by the Seller of its obligations hereunder and the consummation
by the Seller of the transactions contemplated hereby have been duly authorized
by all requisite action on the part of the Seller. This Agreement has been duly
executed and delivered by the Seller, and (assuming due authorization, execution
and delivery by the other parties hereto) this Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable against the Seller in
accordance with its terms, except that enforceability may be subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting or relating to the enforcement of creditors rights
generally and to general principles of equity.
SECTION 3.02 No Conflict. The execution, delivery and performance of this
Agreement by the Seller do not and will not (a) violate, conflict with or result
in the breach of any provision of the Certificate of Formation or Limited
Liability Company Agreement (or similar organizational documents) of the Seller,
(b) conflict with or violate any Law or Governmental Order applicable to the
Seller, or (c) conflict with, result in any breach of, constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a
default) under, or require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
or result in the creation of any Encumbrance on any of the Notes under any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument or arrangement to which the Seller is a
party or by which it is bound.
SECTION 3.03 Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement by the Seller do not and will not require any
consent, approval, authorization or other order of, action by, filing with or
notification to any Governmental Authority, except (a) that any issuance of
shares of common stock, par value $0.01 per share, of Classic ("Classic Common
Stock") upon conversion of the Notes may require filings with the SEC and (b)
the filing with the SEC of the Registration Statement as contemplated by Section
6.07.
SECTION 3.04 Good and Marketable Title. The Seller has and will as of the
Closing have good and marketable title to the Notes to be sold by the Seller
hereunder, and, except for the security interest in the 9% Notes granted by GVI
pursuant to the Allied Capital Note, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or Encumbrance of any kind. Upon
delivery of such Notes and the payment of the Notes Purchase Price therefor as
herein contemplated, the Purchaser will receive good and marketable title to the
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Notes purchased by it from the Seller hereunder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or Encumbrance of any
kind, except Encumbrances created by the Purchaser.
SECTION 3.05 Representations and Warranties contained in the NPAs. The
representations and warranties of the Seller contained in the 7.5% NPA or the 9%
NPA, as applicable, are true and correct in all material respects as of the date
hereof with the same force and effect as if made as of the date hereof, other
than such representations and warranties as are made as of another date, which
are made as of such date.
SECTION 3.06 Full Disclosure. The Seller is not aware of any facts
pertaining to Classic or the Business which affect adversely Classic or the
Business or which are likely in the future to affect adversely Classic or the
Business and which have not been disclosed in the 7.5% NPA, in the Asset
Purchase Agreement, in this Agreement, or in Classic's public filings with the
SEC or in filings by CVGAC regarding the Tender Offer.
SECTION 3.07 Valid Exemption. The Seller acquired the Notes it is selling
hereunder in a transaction that was exempt from registration under the
Securities Act and neither the Seller nor any of its Affiliates has taken any
action with respect to the Notes, including, without limitation, engaging in any
form of "general solicitation", as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act, that would result in the
Purchaser not being able to purchase the Notes hereunder in reliance on an
exemption from registration under the Securities Act.
SECTION 3.08 Purchase Entirely for Own Account. Except as contemplated by
Sections 2.09 and 2.10, as applicable, the shares of Expedia Common Stock to be
received by the Seller hereunder will be acquired for investment for the
Seller's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof in any transaction which would be in
violation of the Securities Act, without prejudice to the Seller's right to sell
or otherwise dispose of all or any part of such shares of Expedia Common Stock
under the Registration Statement or under an exemption from registration under
the Securities Act.
SECTION 3.09 Investment Experience. The Seller is (a) an "Accredited
Investor", as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act, and (b) by reason of its business and financial experience,
and the business and financial experience of those Persons retained by it to
advise it with respect to an investment in the shares of Expedia Common Stock,
it, together with such advisors, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of its prospective investment in the shares of Expedia
Common Stock, is able to bear the economic risk of such investment.
SECTION 3.10 Receipt of Information. The Seller believes that it has
received all the information the Seller considers necessary or appropriate for
deciding whether to receive shares of Expedia Common Stock as consideration for
the sale of the Notes. The Seller further represents that it has had an
opportunity to ask questions and receive answers from the Purchaser regarding
the terms and conditions of the shares of Expedia Common Stock and the business,
properties, prospects, and financial condition of the Purchaser and to obtain
additional
10
information necessary to verify the accuracy of any information furnished to the
Seller or to which the Seller had access. The foregoing, however, does not limit
or modify the representations and warranties of the Purchaser in Article V of
this Agreement or the right of the Seller to rely thereon.
SECTION 3.11 Allied Capital Note. As of the date hereof, the outstanding
principal and accrued interest on the Allied Capital Note is, and as of March
31, 2002 will be, less than $6,500,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CLASSIC
As an inducement to the Purchaser to enter into this Agreement, Classic
hereby represents and warrants to the Purchaser as follows:
SECTION 4.01 Asset Purchase Agreement. The representations and warranties
of Classic to the Purchaser contained in the Asset Purchase Agreement are
incorporated by reference into this Agreement and hereby additionally made to
the Purchaser under this Agreement.
SECTION 4.02 Replacement Notes. When the Replacement Notes are issued and
delivered to the Purchaser as contemplated by this Agreement, the Replacement
Notes will evidence valid and binding obligations of Classic and will be
enforceable against Classic in accordance with their terms, except that
enforceability may be subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors rights generally and to general
principles of equity. Upon delivery of the Replacement Notes to the Purchaser,
the Purchaser will receive good and marketable title to the Replacement Notes,
free and clear of any security interest, mortgage, pledge, lien, charge, claim,
equity or Encumbrance of any kind, except Encumbrances created by the Purchaser.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As an inducement to the Sellers to enter into this Agreement, the
Purchaser hereby represents and warrants to each Seller as follows:
SECTION 5.01 Organization and Authority of the Purchaser. The Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Washington and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Purchaser, the performance by the Purchaser of
its obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the
11
Purchaser. This Agreement has been duly executed and delivered by the Purchaser,
and (assuming due authorization, execution and delivery by the other parties
hereto) this Agreement constitutes a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
that enforceability may be subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors rights generally and to general
principles of equity.
SECTION 5.02 Capitalization. (g) The authorized capital stock of the
Purchaser consists of (i) 120,000,000 shares of Expedia Common Stock and (ii)
10,000,000 shares of preferred stock, par value $0.01 per share ("Expedia
Preferred Stock"). As of January 15, 2002, (i) 53,151,047 shares of Expedia
Common Stock were issued and outstanding, all of which are validly issued, fully
paid and non-assessable, (ii) no shares of Expedia Common Stock are held in the
treasury of the Purchaser, and (iii) 14,671,264 shares of Expedia Common Stock
are reserved for future issuance pursuant to stock options. As of the date of
this Agreement, no shares of Expedia Preferred Stock are issued and outstanding.
Except as set forth in the Purchaser SEC Reports or as contemplated by this
Agreement, and except for stock options granted pursuant to the stock option
plans of the Purchaser, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Purchaser or obligating the Purchaser to issue
or sell any shares of capital stock of, or other equity interests in, the
Purchaser. All shares of Expedia Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and non-assessable. Except as set forth in the Purchaser SEC Reports, there are
no outstanding contractual obligations of the Purchaser to repurchase, redeem or
otherwise acquire any shares of Expedia Common Stock.
(h) The shares of Expedia Common Stock to be issued pursuant to this
Agreement (i) will be duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
Purchaser's Articles of Incorporation or By-Laws or any agreement to which the
Purchaser is a party or is bound and (ii) will, upon effectiveness of the
Registration Statement, be registered under the Securities Act and the Exchange
Act and be registered or exempt from registration under applicable blue sky
Laws. Upon delivery of such shares in payment of the Notes Purchase Price, the
Seller to which such shares are issued will receive good and marketable title to
such shares, free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or Encumbrance of any kind, except Encumbrances created by
the applicable Seller.
SECTION 5.03 No Conflict. Assuming the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 5.04, the execution, delivery and performance of this
Agreement by the Purchaser do not and will not (a) violate, conflict with or
result in the breach of any provision of the Articles of Incorporation or
By-laws of the Purchaser, (b) conflict with or violate any Law or Governmental
Order applicable to the Purchaser or (c) conflict with, or result in any breach
of, constitute a default (or event which with the giving of notice or lapse or
time, or both, would become a default) under, require any consent under, or give
to others any rights of termination, amendment, acceleration, suspension,
revocation, or cancellation of, or result in the creation of any Encumbrance on
any of
12
the assets or properties of the Purchaser pursuant to, any note, bond, mortgage
or indenture, contract, agreement, lease, sublease, license, permit, franchise
or other instrument or arrangement to which the Purchaser is a party or by which
any of such assets or properties are bound or affected.
SECTION 5.04 Governmental Consents and Approvals. The execution, delivery
and performance of this Agreement by the Purchaser do not and will not require
any consent, approval, authorization or other order of, action by, filing with,
or notification to, any Governmental Authority, except (a) that the issuance of
shares of Classic Common Stock upon conversion of the Notes may require filings
with the SEC and (b) the filing with the SEC of the Registration Statement as
contemplated by Section 6.07.
SECTION 5.05 SEC Filings; Financial Statements. (i) The Purchaser has
filed all forms, reports and documents required to be filed by it with the SEC
since January 1, 2000 (collectively, the "Purchaser SEC Reports"). The Purchaser
SEC Reports (i) were prepared in all material respects in accordance with either
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations promulgated thereunder, and (ii) did not, at the
time they were filed, or, if amended, as of the date of such amendment, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(j) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Purchaser SEC Reports was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and each fairly
presents, in all material respects, the consolidated financial position, results
of operations and cash flows of the Purchaser and its consolidated subsidiaries
as at the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which have not had, and
would not have, a material adverse effect on the business, properties,
prospects, and financial condition of the Purchaser).
SECTION 5.06 Purchase Entirely for Own Account. The Notes to be purchased
by the Purchaser hereunder will be acquired for investment for the Purchaser's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in any transaction which would be in violation
of the Securities Act, without prejudice to the Purchaser's right to sell or
otherwise dispose of all or any part of such Notes under a registration
statement under the Securities Act or under an exemption from registration under
the Securities Act.
SECTION 5.07 Investment Experience. The Purchaser is (a) an "Accredited
Investor", as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act, and (b) by reason of its business and financial experience,
and the business and financial experience of those Persons retained by it to
advise it with respect to an investment in the Notes, it, together with such
advisors, has such knowledge, sophistication and experience in business
13
and financial matters so as to be capable of evaluating the merits and risks of
its prospective investment in the Notes, is able to bear the economic risk of
such investment.
SECTION 5.08 Receipt of Information. The Purchaser believes that it has
received all the information the Purchaser considers necessary or appropriate
for deciding whether to purchase the Notes. The Purchaser further represents
that it has had an opportunity to ask questions and receive answers from Classic
regarding the terms and conditions of the Notes and the business, properties,
prospects, and financial condition of Classic and to obtain additional
information necessary to verify the accuracy of any information furnished to the
Purchaser or to which the Purchaser had access. The foregoing, however, does not
limit or modify the representations and warranties of Classic in Article IV of
this Agreement or the right of the Purchaser to rely thereon.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Regulatory and Other Authorizations; Notices and Consents.
(k) Each party hereto shall use its best efforts to obtain all authorizations,
consents, orders and approvals of all Governmental Authorities and officials
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and will cooperate
fully with the other parties hereto in promptly seeking to obtain all such
authorizations, consents, orders and approvals.
(l) No party hereto knows of any reason why all the consents, approvals
and authorizations necessary for the consummation of the transactions
contemplated hereby will not be received.
SECTION 6.02 Notice of Developments. Prior to the Closing, each party
hereto shall promptly notify the other parties hereto in writing of all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any breach of a representation or warranty or
covenant of such party in this Agreement or which could have the effect of
making any representation or warranty of such party in this Agreement untrue or
incorrect in any respect.
SECTION 6.03 Further Action. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable under applicable Law,
and execute and deliver such documents and other papers, as may be required to
carry out the provisions of this Agreement and consummate and make effective the
transactions contemplated by this Agreement.
SECTION 6.04 Extension of Tender Offer; Termination of NPAs; Deemed
Amendment to Notes. Upon execution of this Agreement, (a) CVGI shall cause CVGAC
to extend the Tender Offer until February 15, 2002, the anticipated date of the
Closing, and CVGI shall cause CVGAC to further extend the Tender Offer as
necessary to the actual date of the Closing, unless this Agreement terminates
before the sale of the Notes at the Closing is consummated, (b) the NPAs shall
terminate (which, with regard to the 7.5% NPA, will be
14
deemed to be a termination under Paragraph 8.2(a) of the 7.5% NPA) and, other
than CVGI's rights under Paragraph 11.1 of the 7.5% NPA to have expenses
reimbursed by Classic, shall cease to have any further force or effect and none
of Classic, CVGI or GVI shall have any rights or obligations thereunder, and (c)
the 7.5% Notes shall be amended as provided in the 7.5% Notes Amendment and
Waiver Agreement, which is attached as Exhibit 6.04(c)(i) hereto and the 9%
Notes shall be amended as provided in the 9% Notes Amendment and Waiver
Agreement, which is attached as Exhibit 6.04(c)(ii) hereto.
SECTION 6.05 Cancellation of Notes; Issuance of Replacement Notes. At the
Closing, the Notes shall be cancelled and in consideration therefor Classic
shall issue to the Purchaser the Replacement Notes.
SECTION 6.06 Withdrawal of Tender Offer and Payment to Classic
Stockholders. (m) If the Closing takes place, as soon as practicable thereafter,
but in any event not later than the close of business on the first Business Day
after the Closing Date (or such other day as is the day on which the purchase of
the Notes is completed), CVGI will cause CVGAC to withdraw the Tender Offer
without purchasing any shares which are tendered in response to the Tender
Offer.
(n) Promptly after the Tender Offer is withdrawn in accordance with
Section 6.06(a), GVI will pay to the holders of record of the Classic Common
Stock other than GVI and Xxxxxx (such stockholders, the "Public Stockholders"),
the sum of $0.15 per share. In order to make that payment, not later than
forty-five (45) days after the Closing Date, GVI will pay $661,016 to American
Stock Transfer & Trust, in its capacity as transfer agent for the Classic Common
Stock (the "Transfer Agent"), with an irrevocable and unconditional instruction
to distribute that sum, at the rate of $0.15 per share, to the Public
Stockholders. In addition, Xxxxxx agrees to deliver the sum of $484,745 to GVI
not later than forty (40) days after the Closing Date with an irrevocable and
unconditional instruction to pay $0.11 per share to the Public Stockholders. At
the same time GVI pays $661,016 to the Transfer Agent, GVI will forward to the
Transfer Agent the $484,745 which GVI received from Xxxxxx with an irrevocable
and unconditional instruction to distribute that sum, at the rate of $0.11 per
share, to the Public Stockholders. The foregoing payments by GVI and Xxxxxx to
the Public Stockholders shall be subject to no conditions whatsoever. GVI,
Xxxxxx and Classic agree that the form of such instructions from GVI to the
Transfer Agent, the procedures for the distribution to the Public Stockholders
and any arrangements in connection therewith, including without limitation the
fixing of a record date for such distribution and the form and substance of any
disclosures to the public or the Public Stockholders, shall be subject to review
by Classic to ensure that they comply with applicable laws and stock exchange
rules.
SECTION 6.07 Registered Shares. (o) Registration Statement. The Purchaser
shall, as promptly as reasonably practicable:
(i) prepare and file with the SEC a registration statement on Form
S-3 (the "Registration Statement") with respect to the resale by the
Sellers of any shares of Expedia Common Stock issued to the Sellers
hereunder (including a sufficient number of shares to cover any Additional
Shares) (collectively, the "Registered Shares") and use reasonable best
efforts to cause the Registration Statement to become effective as
15
promptly as reasonably practicable, and keep the Registration Statement
effective until the resale of all Initial Shares and Additional Shares has
been completed;
(ii) prepare and file with the SEC such amendments and supplements
to the Registration Statement and the prospectus used in connection with
the Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the Registered Shares and
cause the Registration Statement to be declared effective;
(iii) furnish to the Sellers such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably
request in order to facilitate the disposition of the Registered Shares;
(iv) use commercially reasonable efforts to register and qualify the
Registered Shares under such other securities or blue sky laws of any
applicable jurisdictions as may be required;
(v) notify the Sellers at any time when a prospectus relating
thereto is required to be delivered under the Securities Act or the
happening of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing;
(vi) cause all Registered Shares to be listed on Nasdaq; and
(vii) provide a transfer agent and registrar for all Registered
Shares and a CUSIP number for all such Registered Shares, in each case not
later than the effective date of such registration.
(p) Information from Sellers. Sellers shall promptly furnish to the
Purchaser all such information regarding the Sellers as shall be required to
effect the registration of the Registered Shares. In addition, each Seller
hereby agrees to be named as an "underwriter" (as that term is defined in
Section 2(a)(11) of the Securities Act) in the Registration Statement.
(q) Indemnification. With respect to the Registered Shares that shall be
included in a registration statement pursuant to this Section 6.07:
(i) To the extent permitted by law, the Purchaser will indemnify and
hold harmless each Seller, the officers, directors and members of each
Seller, legal counsel and accountants for each Seller, any underwriter (as
defined in the Securities Act) for such Seller and each person, if any,
who controls such Seller or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or any state securities laws, insofar as
such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue
16
statement or alleged untrue statement of a material fact contained in, or
incorporated by reference into, the Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Purchaser of the Securities Act, the
Exchange Act, any state securities laws or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state
securities laws; and the Purchaser will reimburse each such Seller,
underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this Section 6.07(c)(i) shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
the Purchaser (which consent shall not be unreasonably withheld), nor
shall the Purchaser be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon a Violation that occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Seller, underwriter or controlling person;
provided further, that the foregoing indemnity agreement with respect to
any preliminary prospectus shall not inure to the benefit of any Seller or
underwriter, or any person controlling such Seller or underwriter, from
whom the person asserting any such losses, claims, damages or liabilities
purchased shares, if a copy of the prospectus (as then amended or
supplemented if the Purchaser shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Seller
or underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
shares to such person, and if the prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(ii) To the extent permitted by law, each Seller will severally as
to itself and not jointly indemnify and hold harmless the Purchaser, each
of its directors, each of its officers who has signed the Registration
Statement, each person, if any, who controls the Purchaser within the
meaning of the Securities Act, legal counsel and accountants for the
Purchaser, any underwriter, any other Seller selling securities in the
Registration Statement and any controlling person of any such underwriter
or other Seller, against any losses, claims, damages or liabilities (joint
or several) to which any of the foregoing persons may become subject,
under the Securities Act, the Exchange Act or any state securities laws,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Seller expressly for use in connection with such registration; and each
such Seller will reimburse any person intended to be indemnified pursuant
to this Section 6.07(c)(ii), for any legal or other expenses reasonably
incurred by such person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 6.07(c)(ii) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of such
Seller (which consent shall not be unreasonably withheld); provided,
further, that in no
17
event shall any indemnity under this Section 6.07(c)(ii) exceed the net
proceeds from the resale of Registered Shares received by such Seller.
(iii) Promptly after receipt by an indemnified party under this
Section 6.07(c) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
6.07(c), deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties that may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented
by such counsel in such proceeding. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified
party under this Section 6.07(c), but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that
it may have to any indemnified party otherwise than under this Section
6.07(c).
(iv)If the indemnification provided for in this Section 6.07(c) is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or
expense referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand
and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim,
damage or expense, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
The obligations of the Purchaser and Sellers under this Section
6.07(c) shall survive the completion of the resales of the Registered Shares.
ARTICLE VII
CONDITIONS TO CLOSING
18
SECTION 7.01 Condition to Obligations of the Sellers and the Purchaser.
The obligations of each Seller and the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver
(where permissible), at or prior to the Closing, of the following condition:
(a) No Governmental Order. No Governmental Authority shall have enacted,
issued, promulgated or entered any Governmental Order which is then in effect
and has the effect of seeking to restrain or materially and adversely alter the
transactions contemplated by this Agreement which is likely to render it
impossible or unlawful to consummate such transactions.
SECTION 7.02 Conditions to Obligations of the Sellers. The obligations of
the Sellers to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or waiver (where permissible), at or prior to the
Closing, of each of the following conditions:
(a) Registration Statement. The Registration Statement shall have been
declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceeding for that purpose shall have been initiated
by the SEC; and
(b) Nasdaq Quotation. The shares of Expedia Common Stock to be issued to
the Sellers hereunder shall have been authorized for quotation on Nasdaq,
subject to notice of official issuance.
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by either the Purchaser or the Sellers in the event that any
Governmental Authority shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable; or
(b) by the mutual written consent of the Sellers and the Purchaser; or
(c) by either the Purchaser or the Sellers if the Registration Statement
shall not have been declared effective by March 31, 2002; provided, however,
that the right to terminate this Agreement under this Section 8.01(c) shall not
be available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur on or prior to such date.
SECTION 8.02 Effect of Termination. (a) In the event of termination of
this Agreement as provided in Section 8.01, this Agreement shall forthwith
become void and there shall be no liability on the part of either party hereto
except (a) as set forth in Sections 8.02(b)
19
and 9.01 and (b) that nothing herein shall relieve either party from liability
for any breach of this Agreement.
SECTION 8.03 Waiver. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements or conditions
of the other party contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition, of this Agreement. The failure of
any party to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Expenses. The Purchaser shall only be responsible for any
costs and expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, whether or not the Closing shall have
occurred, including, without limitation, the fees and disbursements of its
counsel, financial advisors and accountants. In no event shall the Purchaser be
responsible for any costs and expenses incurred by any other party in connection
with this Agreement and the transactions contemplated hereby, whether or not the
Closing shall have occurred, including, without limitation, the fees and
disbursements of counsel, financial advisors and accountants to any other party.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
(a) if to Classic:
Classic Vacation Group, Inc.
Xxx Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxxx & Xxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
20
Telecopy: (000) 000-0000
Attention: X. Xxxxx Xxxx, Esq.
(b) if to the Purchaser:
Expedia, Inc.
00000 XX Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Shearman & Sterling
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(c) if to CVGI:
CVG Investment LLC
c/o Three Cities Research, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: J. Xxxxxxx Xxxxx
with a copy to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
and with a copy to:
Xxxxxx Equity Investors III, L.P.
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxx
21
and with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq. and Xxxxxxx X. Xxxxxx, Esq.
(d) if to GVI:
GV Investment LLC
c/o Three Cities Research, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: J. Xxxxxxx Xxxxx
with a copy to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
SECTION 9.03 Public Announcements. No party to this Agreement shall make,
or cause to be made, any press release or public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without the prior written consent of the other party, and the
parties shall cooperate as to the timing and contents of any such press release
or public announcement, except to the extent required by Law or by rules of
Nasdaq or the American Stock Exchange, in which case each party shall agree to
use reasonable efforts to consult with the other parties hereto regarding the
timing and contents thereof prior to any such release or public announcement or
communication.
SECTION 9.04 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
22
SECTION 9.06 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements and undertakings, both written and
oral, between the parties hereto with respect to the subject matter hereof.
SECTION 9.07 Assignment. This Agreement may not be assigned by operation
of law or otherwise without the express written consent of the Sellers and the
Purchaser (which consent may be granted or withheld in the sole discretion of
the Sellers or the Purchaser); provided, however, that the Purchaser may assign
its rights (but not its obligations) under this Agreement to an Affiliate of the
Purchaser without the consent of the Sellers.
SECTION 9.08 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
SECTION 9.09 Amendment. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Sellers
and the Purchaser or (b) by a waiver in accordance with Section 8.03.
SECTION 9.10 Governing Law(l) . (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Washington, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
(b) Each party hereto irrevocably submits to the jurisdiction of any
Washington state court or any federal court sitting in the State of Washington
in any action arising out of or relating to this Agreement, and hereby
irrevocably agrees that all claims in respect of such action may be heard and
determined in such Washington state or federal court. Each party hereto hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. The
parties hereto further agree, to the extent permitted by law, that final and
unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and amount of
such judgment.
(c) To the extent that any party hereto has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
party hereto hereby irrevocably waives such immunity in respect of its
obligations with respect to this Agreement.
(d) Each party hereto waives, to the fullest extent permitted by
applicable laws, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Agreement. Each
party hereto certifies that it has been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications set forth above in
this Section.
23
SECTION 9.11 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
CVG INVESTMENT LLC
By: /s/ Xxxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxxx Xxxxx
Title: Secretary and Treasurer
GV INVESTMENT LLC
By: /s/ Xxxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxxx Xxxxx
Title: Secretary
EXPEDIA, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
CLASSIC VACATION GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
And, solely, for the purposes of
Section 6.06(b) herein:
XXXXXX EQUITY INVESTORS III, L.P.
By: TC Equity Partners, L.L.C, its
general partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
25
EXHIBIT A
FORM OF 7.5% REPLACEMENT NOTE
DEMAND PROMISSORY NOTE
Note: E-1
$[ ] February [ ], 2002
FOR VALUE RECEIVED, the undersigned, CLASSIC VACATION GROUP, INC., a New
York corporation ("Maker"), HEREBY PROMISES TO PAY ON DEMAND (subject to the
limitations on demand set forth in the paragraph below) to the order of EXPEDIA,
INC. (herein called "Payee", which term shall herein in every instance refer to
Payee and all assignees and successors-in-interest) the principal sum of $[ ] on
or before December 31, 2006; together with interest (computed on the basis of a
year of 365 or 366 days, as the case may be, for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable) on the principal amount hereof from time to time
outstanding from the date hereof until such principal amount is paid in full, at
an interest rate per annum of seven and a half percent (7.5%) (the "Interest
Rate"); provided, however, that any overdue amount of principal, interest or
other amounts payable hereunder shall bear interest, payable on demand, at the
rate which is 500 basis points higher than the Interest Rate, or such lower rate
as is the maximum rate permitted by law. Interest shall be payable on the first
day of March, June, September and December of each year (each an "Interest
Payment Date"), with the first interest payment to be made on the first Interest
Payment Date after the Termination Date (as defined below).
Payee shall not be entitled to any demand for payment hereunder until the
date that the Asset Purchase Agreement, dated as of January 22, 2002, among the
Maker, Payee and Classic Custom Vacations ("CCV"), a California corporation (the
"Asset Purchase Agreement"), has been terminated prior to consummation in
accordance with its terms (the "Termination Date"). Upon consummation of the
Asset Purchase Agreement in accordance with its terms, Payee agrees to surrender
and cancel this Note, as partial consideration for the purchase by Payee of the
assets of CCV thereunder.
Maker agrees to pay on demand all costs and expenses, if any, including
reasonable counsel fees and expenses, in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Note.
Both principal and interest hereunder are payable prior to 11:00 A.M.
(Washington time) on the day for payment thereof (whether upon demand or
otherwise) in lawful money of the United States of America to the Payee in same
day funds at such address or to such account as Payee specifies to Maker in
writing at least three (3) Business Days before any payment is to be made.
Whenever any payment hereunder shall be stated to be due on a day other than a
day of the year on which banks are not required or authorized to close in
A-1
Washington (any such other day being a "Business Day"), such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest.
Maker shall have the right to prepay the whole or any part of the
principal sum hereof, together with any interest which has accrued thereon as of
the date of such prepayment and which is attributable to the portion of the
principal amount to be prepaid and any other amounts due under this Note,
without premium or penalty at any time and from time to time.
Payee may freely assign this Note or its interest herein to any of its
direct or indirect subsidiaries, parent entities or successors in interest.
Payee may not sell or assign this Note or its interest herein to any party other
than those listed in the preceding sentence without first receiving prior
written approval from Maker, and such approval is not to be unreasonably
withheld.
This Note shall be governed by and construed in accordance with the laws
of the State of Washington.
CLASSIC VACATION GROUP, INC.
By:
---------------------------
Title:
A-2
EXHIBIT B
FORM OF 9% REPLACEMENT NOTE
DEMAND PROMISSORY NOTE
Note: E-2
$[ ] February [ ], 2002
FOR VALUE RECEIVED, the undersigned, CLASSIC VACATION GROUP, INC., a New
York corporation ("Maker"), HEREBY PROMISES TO PAY ON DEMAND (subject to the
limitations on demand set forth in the paragraph below) to the order of EXPEDIA,
INC. (herein called "Payee", which term shall herein in every instance refer to
Payee and all assignees and successors-in-interest) the principal sum of $[ ] on
or before July 1, 2007; together with interest (computed on the basis of a year
of 365 or 366 days, as the case may be, for the actual number of days (including
the first day but excluding the last day) occurring in the period for which such
interest is payable) on the principal amount hereof from time to time
outstanding from the date hereof until such principal amount is paid in full, at
an interest rate per annum of nine percent (9%) (the "Interest Rate"); provided,
however, that any overdue amount of principal, interest or other amounts payable
hereunder shall bear interest, payable on demand, at the rate which is 200 basis
points higher than the Interest Rate, or such lower rate as is the maximum rate
permitted by law. Interest shall be payable on the first day of March, June,
September and December of each year (each an "Interest Payment Date"), with the
first interest payment to be made on the first Interest Payment Date after the
Termination Date (as defined below).
Payee shall not be entitled to any demand for payment hereunder until the
date that the Asset Purchase Agreement, dated as of January 22, 2002, among the
Maker, Payee and Classic Custom Vacations ("CCV"), a California corporation (the
"Asset Purchase Agreement"), has been terminated prior to consummation in
accordance with its terms (the "Termination Date"). Upon consummation of the
Asset Purchase Agreement in accordance with its terms, Payee agrees to surrender
and cancel this Note, as partial consideration for the purchase by Payee of the
assets of CCV thereunder.
Maker agrees to pay on demand all costs and expenses, if any, including
reasonable counsel fees and expenses, in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Note.
Both principal and interest hereunder are payable prior to 11:00 A.M.
(Washington time) on the day for payment thereof (whether upon demand or
otherwise) in lawful money of the United States of America to the Payee in same
day funds at such address or to such account as Payee specifies to Maker in
writing at least three (3) Business Days before any payment is to be made.
Whenever any payment hereunder shall be stated to be due on a day
B-1
other than a day of the year on which banks are not required or authorized to
close in Washington (any such other day being a "Business Day"), such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest.
Maker shall have the right to prepay the whole or any part of the
principal sum hereof, together with any interest which has accrued thereon as of
the date of such prepayment and which is attributable to the portion of the
principal amount to be prepaid and any other amounts due under this Note,
without premium or penalty at any time and from time to time.
Payee may freely assign this Note or its interest herein to any of its
direct or indirect subsidiaries, parent entities or successors in interest.
Payee may not sell or assign this Note or its interest herein to any party other
than those listed in the preceding sentence without first receiving prior
written approval from Maker, and such approval is not to be unreasonably
withheld.
This Note shall be governed by and construed in accordance with the laws
of the State of Washington.
CLASSIC VACATION GROUP, INC.
By:
---------------------------
Title:
B-2
EXHIBIT 6.04(c)(i)
7.5% NOTES AMENDMENT AND WAIVER AGREEMENT
EXHIBIT 6.04(c)(ii)
9% NOTES AMENDMENT AND WAIVER AGREEMENT
